CIMB Daily Fixed Income Commentary - 7 August 2014

Market Roundup

• US Treasury yields fell marginally along the curve, on the back of buying interest amid the risk-off sentiment in the market driven by escalated geopolitical tension in Ukraine. Elsewhere, the flows for safety assets caused German sovereign yields shifted lower in the range of 2-6bps along the curve.
• MGS market was better bidded, thanks to the foreign buying activities particularly on the 7- and 10-year MGS. Meanwhile MGS Aug’14 closed at 3.28%, 10bps higher than prior day’s level, while printed decent volume of RM603 million. Aside, GII May’24 was actively transacted amounted to RM700 million, with yield stood firm at 4.13%.
• Thai government bonds posted gains after seeing the central bank kept the interest rate unchanged at 2.00% as widely expected. Meanwhile, total transactions edged up to Bt11.3 billion, compared to Bt7.2 billion recorded a day ago. Apart from that, IRS curve ended lower by 1-3bps, with exception that the 1-year IRS rate which inched up by 1bp to 1.97%, in line with sovereign yield curve movement.
• IDR denominated government bond market still moved in narrow range, but yields ended slightly higher than previous day. Players still reacted to previous data such as slower economy growth rate and there were no other sentiments that strong enough bring the market back to positive movement currently. Overall, the market moderated but we saw some players tended to choose shorter dated papers.
• Geopolitical concerns in Ukraine escalated after the number of Russian troops increased on the Ukraine border, and thus pressured the Asian dollar credits to move wider during midweek. Newly issued EXIM Bank of Korea maturing 2019 and 2026 were negatively impacted by the weak sentiment, and traded 5-7bps wider to 79 and 90bps from the reoffer spreads. Meanwhile, B1 rated KWG Aug’19 edged lower by 0.18pt to 100.70pts.